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State loses big court round over managed care

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Illinois

* David Jackson at the Better Government Association…

Since 2011, Illinois lawmakers have promised to save taxpayer dollars, improve care for low-income patients and give them more choices when selecting doctors and clinics by privatizing its Medicaid program, which was completed in 2018.

Before then, the state paid each doctor, clinic or hospital a fee for every Medicaid service rendered. Now, the state contracts with private insurance companies to make reimbursement decisions.

Under their current contracts with the state, four for-profit MCOs are supposed to quickly reimburse practitioners who care for Medicaid patients. Medicaid rules say the MCOs must pay 90% of providers’ uncontested claims within 30 days and 99% within 90 days.

But Saint Anthony Hospital, a safety net hospital on Chicago’s Southwest Side, and many providers allege the MCOs deploy bureaucratic dodges and opaque billing error codes to skirt the federal rule, make partial payments, pay years late or deny claims without explanation.

* But a federal appellate court has stepped in…

The U.S. Court of Appeals for the 7th Circuit ruled Saint Anthony Hospital “alleged a viable claim for relief” when it sued state officials for not adequately overseeing the insurance companies they contracted as managed care organizations.

The panel overturned a lower court decision to toss out the case and underscored widespread claims from hospitals and caregivers who say they have been driven to near bankruptcy by the failure to reimburse them fairly. […]

The appeals court panel overturned a district court judge who ruled the hospital could have first arbitrated each billing claim against the insurance companies individually — a task providers said is costly, cumbersome and unachievable.

* From the decision…

The State has tools available to remedy systemic slow payment problems—problems alleged to be so serious that they threaten the viability of a major hospital and even of the managed‐care Medicaid program as administered in Illinois. If Saint Anthony can prove its claims, the chief state official could be ordered to use some of those tools to remedy systemic problems that threaten this literally vital health care program. We therefore reverse in part the dismissal of the case and remand for further proceedings.

The state essentially claimed a loophole in the definition of the term “health care providers” that allowed it to delay payments to hospitals but not to physicians. The court pointed to ample evidence to the contrary…

Given this evidence, it would seem odd to construe a provision Congress intended to assure timeliness of provider payment as not applying to many providers, as HFS advocates. That would appear to defeat the statute’s evident purpose in most cases. We decline to read the text in such a manner.

The court was split 2-1. According to the article, the state hasn’t decided on its next move.

posted by Rich Miller
Thursday, Jul 7, 22 @ 11:21 am

Comments

Stop privatizing state services in general. By instituting profit motives into the management, you’re just creating perverse incentives. There are very few situations that I can think of that have been improved by injecting an additional for-profit entity into state services.

Comment by Homebody Thursday, Jul 7, 22 @ 11:26 am
“Since 2011, Illinois lawmakers have promised to save taxpayer dollars…”

Sound of belly laughs…loud.

Comment by Dotnonymous Thursday, Jul 7, 22 @ 11:29 am
“There are very few situations that I can think of that have been improved by injecting an additional for-profit entity into state services”

Not exactly a perfect example - but the auto title & license registration services at Currency exchanges are way more convenient and the staff offers much better and friendly customer service than at the SOS, sure you pay a convenience fee but it is worth it. I also get emission tests done at the Meineke rather than the state-run facilities for the same reason.

Comment by Donnie Elgin Thursday, Jul 7, 22 @ 12:05 pm
Hat’s off to Saint Anthony’s for taking on the State and to the BGA for reporting on this issue.

Comment by Back to the Future Thursday, Jul 7, 22 @ 12:13 pm
It’s managed cost not managed care. The MCOs are getting rich while providers are strung out and suffer massive staffing shortages. The pritzker admin, and many in the ga, turn a blind eye because they don’t want the state dealing directly with providers, and would prefer to push piles of money to the MCOs and say the job is done. Watching HFS leadership in Approps was an amazing display in denial. They acknowledge their “partnership” with the MCOs, and share “success stories” yet fight any and every effort to improve care to patients or fairness to providers. I hope that this process flushes this all out into the light. HFS needs to be flipped upside down and be rebuilt.

Comment by Tood Aloo Thursday, Jul 7, 22 @ 12:20 pm
===Given this evidence, it would seem odd to construe a provision Congress intended===

Illinois is the Land of Lincoln and needing to be told by federal courts that we have to do what was blatantly obvious that we should have been doing the whole time.

The question is how much has it cost us to take this dumb argument to court? How much harm have we done to our healthcare providers?

Comment by Candy Dogood Thursday, Jul 7, 22 @ 12:22 pm
=== I hope that this process flushes this all out into the light. HFS needs to be flipped upside down and be rebuilt. ===

There are more than a few agency’s where the best way to improve that agency would be to send every exempt and merit comp employee packing, at least the ones hired before 2019. We’d lose some great and talented people, but be so much better off for it.

Comment by Candy Dogood Thursday, Jul 7, 22 @ 12:25 pm
I’ve long heard about slow pay for hospitals in Illinois. but wishing no money could go to this one, a notoriously bad hospital.

Comment by Amalia Thursday, Jul 7, 22 @ 12:54 pm
===There are more than a few agency’s where the best way to improve that agency would be to send every exempt and merit comp employee packing, at least the ones hired before 2019. We’d lose some great and talented people, but be so much better off for it.===

You have heard about the baby and the bathwater, right?

Comment by Ridgelander Thursday, Jul 7, 22 @ 1:25 pm
= If Saint Anthony can prove its claims, the chief state official could be ordered to use some of those tools to remedy systemic problems that threaten this literally vital health care program. =

How is that 0-day backlog looking?

Comment by Dirty Red Thursday, Jul 7, 22 @ 1:45 pm
What a surprise that a for-profit entity would deny making payments to make higher profits, while the State that approved them tries to duck its legal and moral responsibilities. Glad the App. Ct. revived the case; it will likely result in yet another court-ordered and monitored solution…which Illinois will probably botch compliance with like many of the others.

Comment by thisjustinagain Thursday, Jul 7, 22 @ 2:14 pm
MCO’s are a rain delay for providers getting paid and in no way are value added. Most have neither the systems nor expertise to begin to add anything but frustration and cash flow issues for health care organizations.

Banks value Medicaid receivables at a lesser % (in terms of lines of credit, etc.) as they know that the process of getting paid is cumbersome and the likelyhood of getting stiffed or simply giving up on the mountain of obstacles is high.

A boondoggle of the highest order.

Comment by Do It Thursday, Jul 7, 22 @ 2:17 pm
The MCO business model is: deny services; delay services; deny payment; delay payment; rinse and repeat.

Comment by Friendly Bob Adams Thursday, Jul 7, 22 @ 2:27 pm
“HFS needs to be flipped upside down and be rebuilt.”

Completely disagree. This agency under Theresa Eagleson has improved dramatically including on this issue. I don’t have a dog in this fight but have worked closely with the department and generally found them thoughtful and diligent.

And contrary to the simplistic BGA story, this dispute is way way way more complicated. Some of these safety nets are, to use Amalia’s words above, “notoriously bad hospital[s].” Just think of the political mess at Laretto that led to the firing of the CEO. Some of these providers resort to fights in the press where they are likely to get sympathetic treatment to compensate for their unwillingness to develop the administrative expertise necessary to get paid.

All of that being said, as anyone who has had to fight with their insurers to get paid, that industry is really awful. So lots of blame to go around.

Comment by New Day Thursday, Jul 7, 22 @ 3:12 pm
== The MCO business model is: deny services; delay services; deny payment; delay payment; rinse and repeat. ==

FWIW … back years ago when the State did self-pay, the Legislature would only appropriate so much money for the year. SOP was to delay and deny payment on pretty much anything, then eventually approve payment if you appealed the denial. So I don’t believe it would be any better if the State was directly running it.

Comment by RNUG Thursday, Jul 7, 22 @ 5:58 pm
RNUG, I would be curious as to what years and what administrations you are talking about and whether your comments are Medicaid only or all state programs. Delay was a problem at the start of the Edgar administration but was fixed from the second half through the early Blagojevich years. As for denial, first read Maury Possey’s articles in 1994, then read the whole BGA series Milking Medicaid. There are some unsavory characters out there. There are even more that do not read the instructions. As for the appeal process, I am going to die before I write my book but that was an interesting process. As for St. Anthony’s problems, the systems set up to protect them became difficult to maintain as managed care became the dominant payor for Medicaid. That is a federal rule problem and a no budget problem which really was a no revenue problem because Medicaid bills were ordered to be paid by a judge. Thank God for Madigan and a few brave Republicans solving that problem. With a low payment cycle and General Assembly actions their issue should be eased but it can no longer come from Medicaid and has to be straight GRF. I gave up fighting Medicaid MCO’s when Madigan and Quinn did and have advised people to learn to bear another cross in providing health care. Given the emasculation of the state workforce that started slowly under Edgar and reached its heights under Blago, Quinn, and Rauner along with “Procurement Reforms”, Medicaid could never go back to a state-run system. The MCO’s know this, which does not bode well for health care providers, taxpayers, and clients. I will leave DHFS administration of the contracts for another day but given prior reports on Capitol Fax and the entirety of the BGA “Milking Medicaid” series problems exist. There are a lot of good people at DHFS, some are my friends, but it ain’t as simple as it looks, and there may be some not so good people both inside and outside of DHFS influencing this process.

Comment by George Hovanec Thursday, Jul 7, 22 @ 8:29 pm
- George Hovanec -

My career with the State started in 1970. My memory is a bit vague as to specific years, but I believe it was initially during the mid-70’s through the mid-80’s, then again later on somewhere in the 90’s when reimbursements were more just delayed, sometimes over a year. And at those times it was non-Medicare, the State employees insurance the State was messing up.

Comment by RNUG Friday, Jul 8, 22 @ 6:57 am
New day, I guess we will take your word for it over EVERY provider group treating patients in the state. HFS may be thoughtful, but too much thought goes into better and more efficient ways to deny and delay payments. In my earlier comment, I noted that this is the GAs problem as well. HFS can’t pay providers with money it doesn’t have. The reality is that this continues to be an over promise under deliver situation. A reality check is needed. If Illinois leaders, from pritzker on down to the most junior rep, want to brag about the availability of quality health care in this state, they should do what is necessary to generate the resources necessary to pay the hard working health care providers for their services, without delays and denials.

Comment by Tood Aloo Friday, Jul 8, 22 @ 8:25 am